Leading Issues in the Economy of Pakistan

Pakistan finds itself today in a big financial crisis which could lead to difficulties in the honoring of the external payment obligations. There is a dire need for undertaking a carefulstudy of the factorsresponsible for this crisis, the resulting impacts on the people of Pakistan and the wide-ranging reforms that need to be undertaken to emerge successfully from this crisis.

This book on leading issues in the economy of Pakistan covers these areas. In view of the topical nature of this kind of book attempts have been made to expedite the research, write the chapters, and facilitate early publication.

The first part of the book looks at the economic performance of the last three governments and the SBP. This is followed by an economic review of 2021-22 and the economic outlook for 2022-23, including the large negative impact of the floods and of physical restrictions placed on imports in the presence of very scarce foreign exchange reserves

The second part of the book focuses on the current IMF program which was resumed in earlier September 2022. The impact of prior actions and reforms committed to by the government to the IMF up to March 2023 are highlighted. An assessment is made on implementation of reforms in the first quarter of 2022-23 as part of the ninth program review. Reasons for delays in the completion of the review are highlighted.

The third part highlights some key burning issues. The first chapter assesses the degree of vulnerability of Pakistan to a default situation and the likely depreciation of the rupee in 2022-23 if a market-based exchange rate policy is followed.

Thereafter, an in-depth analysisis undertaken of the causes of the high rate of inflation and the impact thereof is highlighted. The next chapter attempts a quantification of the impact of the floods and the contractionary policies being followed on the level of unemployment and poverty. This part concludes with the sad newsthat Pakistan hasfallen from the middle to the low level of development according to the Human Development Index of the UNDP.

The first three parts of the book have highlighted the need for strong, urgent and wideranging policy measures and improvements in governance. There are four chapters in this final part ofthe book related to sustaining trade and the balance of payments,managing the public finances, removing impediments to growth, and improving economic governance. It is imperative that the recommended measures are implemented to salvage the economy. Leading Issues in the Economy of Pakistan: Agenda for Reforms iv Thanks are due to Next Capital Limited for financially supporting the research undertaken for the book. The assistance of Muhammad Imran and Muhammad Rizwanullah Khan is also acknowledged.